Shanghai Party Boss Held for Corruption in Crackdown by President Against Opponents

By JOSEPH KAHN

Published: September 25, 2006

Chinese security officers have detained the powerful party boss of Shanghai for corruption, as President Hu Jintao expands a crackdown on graft that has focused on prominent political opponents.

Chen Liangyu, the Communist Party's top official in the wealthy East Coast enclave and a member of the ruling Politburo, was formally detained on Sunday afternoon, Chinese state media confirmed Monday afternoon.

It is exceedingly rare in China for members of the ruling Politburo to face legal trouble, even when the authorities have evidence of corrupt activities by them or people close to them. Mr. Hu almost certainly would not have approved of the action unless he considered Mr. Chen an obstacle to his political control or his policy agenda.

The action seems intended mainly to reduce local resistance to edicts by Mr. Hu and Prime Minister Wen Jiabao, while also smashing the remnants of the political clique that had been tied more closely to Jiang Zemin, China's former paramount leader, than to Mr. Hu.

Mr. Hu is seeking to reshuffle the members of the Politburo and all the leading government and provincial posts at the 17th Party Congress to be held next year. He has sought to extinguish opposition to his priorities among senior party members ahead of that event and to anoint his own successor.

Mr. Chen's political machine has long been considered one of the strongest and most corrupt in a country where the powerful find ways to claim a big share of the country prosperity, despite almost constant anti-corruption campaigns within the ruling party.

As Shanghai party boss, Mr. Chen enjoyed considerable leeway to run China's wealthiest urban region. Friends and relatives of Mr. Chen are suspected of using access to public funds,, including Shanghai's pension fund, to enrich themselves, people informed about the investigation said. They said at least half a dozen other officials and many prominent local deal makers have also been arrested in recent weeks.

Mr. Chen, 60, inherited the political base of Mr. Jiang, who rose to prominence as Shanghai party boss in the 1980's and subsequently promoted many of his cohorts to top national party and government posts. He was once seen as having the potential to join the Politburo Standing Committee and compete for China's top political titles.

The so-called Shanghai faction did not operate like a cohesive political clique in recent years and failed to help Mr. Jiang himself retain his final post as military chief in 2004, when Mr. Hu forced him into retirement and consolidated his own power.

But Mr. Chen resisted central government demands to reduce speculative real estate investment and tamp down economic growth to prevent waste and overheating. He offered a prominent symbol of the strength of local party machines even in the face of heavy pressure from the Beijing leadership, so his downfall seems likely to signal Mr. Hu's rising authority.

The last time a sitting Politburo member lost his post for corruption was in 1995, when Mr. Jiang, then China's top leader, purged Chen Xitong, the Beijing party chief Mr. Jiang considered a formidable rival.

Chen Liangyu, who is not related to Chen Xitong, was detained under ''double regulations,'' a form of house arrest for members of the Communist Party suspected of wrongdoing. Such detentions do not necessary lead to legal charges, but after losing the confidence of the top leadership, Mr. Chen will almost certainly be stripped of his political posts.

His detention is a black mark for Shanghai, which China has built into a showcase market economy and financial center in an attempt to present its most sophisticated face to the outside world.

The ongoing investigation into corruption provided a glimpse into another side of the city's stunning growth. Mr. Chen's political machine controlled a great swathe of Shanghai's economy, including prime portions of real estate and major infrastructure projects.

A huge investigation by the central government into corruption there focused on the misuse of pension funds to invest in building projects tied to local leaders and their business cohorts.

But Mr. Chen, his relatives and friends were also implicated in a major real estate scandal in 2003 that resulted in a short prison term for one well connected Shanghai businessman, Zhou Zhengyi, but did not focus on Mr. Chen or officials close to him directly. Issues related to that handling of that investigation were revived during the latest crackdown, people informed about the investigation said.

Mr. Hu's corruption crackdown began last spring and picked up pace during the summer months. It has so far resulted in the arrests of lower-level officials and well-connected businessmen in Shanghai, Beijing, Tianjin, Fujian and other areas.

Most of the people implicated in the scandals are viewed as old loyalists of Mr. Jiang or members of the Politburo not considered among the core supporters of Mr. Hu, leading to suspicions that Mr. Hu has used the fight against corruption as a tool to eliminate opponents.